Apr 16, 2020 (Nikkei) - Amid the coronavirus pandemic, Japanese Prime Minister Shinzo Abe has proposed building an economy that is less dependent on one country, China, so that the nation can better avoid supply chain disruptions.
The call touched off a heated debate in the Chinese political world.
In Zhongnanhai, the area in central Beijing where leaders of the Chinese Communist Party and the state government have their offices, "there are now serious concerns over foreign companies withdrawing from China," a Chinese economic source said. "What has particularly been talked about is the clause in Japan's emergency economic package that encourages (and funds) the re-establishment of supply chains."
Had the pandemic not struck, Chinese President Xi Jinping's maiden state visit to Japan would have been wrapped up by now with Xi proudly declaring a "new era" of Sino-Japanese relations. He would have cheered on Abe as Japan prepared for the next big event, the 2020 Olympics.
Instead, both Xi's trip and the Tokyo Olympics have been postponed, and Sino-Japanese relations find themselves at a crossroads.
Japanese Prime Minister Shinzo Abe was clear about the direction he wants Japanese manufacturers to take -- away from an over-reliance on China. (Photo by Uichiro Kasai)
Signals of Abe's new policy were visible as early as March 5.
Japan had finally been able to put the Diamond Princess cruise ship disaster behind it but was still snowed under by the challenge of preventing the virus's further spread.
On that date, coincidentally the same day the postponement of Xi's Japan visit was announced, the Japanese government held a meeting of the Council on Investments for the Future. Abe, who chairs the council, said he wanted high value-added product manufacturing bases to come home to Japan.
At the table were influential business leaders such as Hiroaki Nakanishi, chairman of the Japan Business Federation, the country's biggest business lobby better known as Keidanren.
"Due to the coronavirus, fewer products are coming from China to Japan," Abe said. "People are worried about our supply chains."
Of the products that rely heavily on a single country for manufacturing, "we should try to relocate high added value items to Japan," the leader said. "And for everything else, we should diversify to countries like those in ASEAN."
Abe's remarks were clear. They came as disruptions hit the procurement of auto parts and other products for which Japan relies on China, seriously impacting corporate Japan's activities.
And they asked for something more than the traditional "China plus one" concept, in which companies add a non-China location to diversify production.
Abe was forming a "shift away from China" policy.
With the nation transfixed by coronavirus coverage, the proposal failed to generate big headlines in Japan.
But China was watching carefully, perhaps wondering whether it was about to undergo an industrial hollowing-out like Japan once experienced.
Such a trend would shake the foundation of China's long-standing growth model.
